The International Monetary Fund (IMF) is an international organisation that provides financial assistance and advice to its 186 member countries, it was born at the end of World War II, out of the Bretton Woods Conference in 1945. Membership is open to any country that conducts foreign policy and accepts the organisation’s statutes. The IMF focuses on three main branches that is to say surveillance, lending and technical assistance. Zimbabwe which is a member of the IMF, had been immensely affected by the remedial measures that had been implemented against the country.
The remedial measures entailed: (i) declaration of non-cooperation with the IMF, (ii) the suspension of technical assistance (which had already been partially lifted) and, (iii) the removal of Zimbabwe from the list of Poverty Reduction and Growth Trust (PRGT) eligible countries. The main facility offered by the IMF is known as the PRGT. As the name implies, it aims to alleviate poverty and famine in the poorest member countries (in this case Zimbabwe) while laying solid foundation for economic growth and development. Loans are administered at very low interest rates.
For Zimbabwe to have accessed the PRGT they had to embark on an IMF-monitored economic reform program, otherwise known as Structural Adjustment Policies (SAP). The Executive Board of the International Monetary Fund (IMF) approved, on a lapse of time basis, the removal of the remedial measures applied to Zimbabwe that had been in place because of the member’s overdue financial obligations to the PRGT, effective November 14, 2016. This follows Zimbabwe’s full settlement of all of its overdue financial obligations to the PRGT of Special Drawing Rights (SDR) 78.3 million (about US$107.9 million) on October 20, 2016. The IMF is financed by money from quota subscriptions paid by member countries. The size of each quota is ascertained by the size of the economy of each government and how much it can pay. The quota system also determines the weight each state has within the IMF, which literally equates to voting rights and how much credit can be dispensed from the IMF. Twenty-five percent of each country’s quota is paid in the form of SDR, which are a claim on the freely usable currencies of IMF members.
Zimbabwe had been in continuous arrears to the PRGT since February 2001. As a result; the country could not access the general resources of the fund and was thus removed from the list of countries eligible to borrow resources under the PRGT. Zimbabwe is now current on all of its financial obligations to the IMF and for other future requests to be considered (namely resumption of fresh credit lines), it must comply with the following: (i) resolve its arrears to multilateral creditors (including the African Development Bank (AfDB), the World Bank, and other multilateral institutions), bilateral official creditors, and external private creditors (if any); and (ii) implement strong fiscal adjustment and structural reforms to restore fiscal and debt sustainability and foster private sector development.